Turkey's finance chief: Action plan ready to ease markets

An investor looks at an electronic board showing stock information at a brokerage house in Shanghai China. Aly Song Reuters  File

An investor looks at an electronic board showing stock information at a brokerage house in Shanghai China. Aly Song Reuters File

President Recep Tayyip Erdogan on Sunday said the crash of the Turkish lira, sparked by a bitter dispute with the United States, was a "political plot" against Turkey and warned Ankara would now seek new markets and partners.

The new tariff threat targeting Ankara comes as bilateral tensions have risen over the detention and trial in Turkey of USA pastor Andrew Brunson, 50.

Relations between the two North Atlantic Treaty Organisation allies have sunk to their lowest point in decades over a string of issues including the detention of United States pastor Andrew Brunson on terror-related charges, prompting the Turkish lira to hit record lows against the dollar.

"I call out to those in the United States. I am addressing the USA once again: it is a pity that you chose a pastor over your strategic partner in North Atlantic Treaty Organisation.

"We only bow before God".

"There is no economic reason for the present (currency plunge) situation".

"Our response to those who wage a trade war against the whole world and include our country in that would be heading towards new markets and new alliances", Mr. Erdogan said.

"Some close the doors and some others open new ones", he added.

Erdogan promised supporters that Turkey was taking the necessary precautions to protect its economy but added "the most important thing is breaking the hands firing these weapons".

"We will say bye bye to those, who sacrifice their strategic partnership and alliance with a country of 81 million people on the altar of their relations with terror organizations", he said. "You dare to sacrifice 81 million Turks for a priest who is linked to terror groups?"

Brunson and his wife Norine were imprisoned in October 2016, three months after that coup attempt in Turkey, for their alleged links to the movement of religious leader Fethullah Gulen and the Kurdistan Workers' Party. Trump has described his detention as a "total disgrace" and urged Erdogan to free him immediately. The White House said the newly imposed sanctions would take effect from August 13. Erdogan asked Washington. "What happened to you now?"

"Dollar/yen is bound in range, with caution toward the U.S. -Japan trade talks capping the pair's upside, but it is also seeing downside support before the U.S. CPI release", said Imaizumi at Daiwa.

Analysts say that while Washington's sanctions against Ankara sparked the immediate crisis, Turkey's economy has been risking trouble for a while due to high inflation and the weak lira.

Erdogan, who has called himself the "enemy of interest rates", wants cheap credit from banks to fuel growth, but investors fear the economy is overheating and could be set for a hard landing.

This day, the spokesman of the Turkish government, Ibrahim Kalin, assured that these actions will not be able to bring down their country, but will isolate the United States even more in the global context.

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